Nucleus Research | Return On Investment (ROI) http://nucleusresearch.com We help our clients build the ROI business case for technology. Thu, 26 Feb 2015 18:47:51 +0000 en-US hourly 1 Our 2015 Top Ten Predictions http://nucleusresearch.com/our-2015-top-ten-predictions/ http://nucleusresearch.com/our-2015-top-ten-predictions/#comments Thu, 22 Jan 2015 14:58:17 +0000 http://nucleusresearch.com/?p=7431 Our top 10 predictions went out last week. This year’s report was bit delayed from our normal November timeframe but...

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Our top 10 predictions went out last week. This year’s report was bit delayed from our normal November timeframe but the analyst team was under a bit of pressure this past Fall. We’ve had a great track record since the first top 10 was published in 2004 and now 11 years later I’m proud of the work and insight of Rebecca Wettemann and her team. Read them and judge for yourself.

We’ve predicted the end of the timeclock, the rise of 3D printing, the fall of Ballmer, and the restructuring of SAP. We pointed out the struggles of HP and the change in the nature of corporate IT. It’s no surprise we were early to embrace the cloud, given the obvious ROI from cloud-based solutions. We highlighted the rise of analytics, the weaknesses of “Big Data” (It’s only important to the extent you can boil it down to something useful), and saw the coming move to analytics within core application areas instead of standalone solutions. You probably know how we feel about Google glass.

Developing our top 10 starts by bringing the analyst team together and debating the future of technology. We’re looking at 2 to 3 years out, so no “flying car” predictions from us. With a wall filled with ideas we analyze each to assess the underlying value. Our view of the world is that technology that delivers value survives while technology that does not will wither (no, I still don’t get Apple). Interesting ideas such as 3D TVs and RFID without a clear value statement are more critically assessed. From there we cut the list to the 10 predictions we think are most interesting. It’s a great debate and interesting to watch the analyst team lobby for their favorites. Some years our top 10 actually had 11 predictions but for 2015, there was a clear consensus for 10.

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Google Glass http://nucleusresearch.com/google-glass/ http://nucleusresearch.com/google-glass/#comments Fri, 16 Jan 2015 19:20:34 +0000 http://nucleusresearch.com/?p=7454 Well that was a shocker. The children at Google couldn’t turn Google Glass into a real product. Not to worry,...

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Well that was a shocker. The children at Google couldn’t turn Google Glass into a real product. Not to worry, the company with the worst case of corporate ADD has already forgotten about it and is off chasing butterflies.

This isn’t a surprise and we saw it coming back in March. Google fell for what we in the analyst world call “shiny object syndrome.” Just because something seems like a cool idea doesn’t mean it is. The advantage of Google Glass wasn’t in displaying pages but in overlaying the virtual world onto the real world. Those applications didn’t appear. What we saw were static pages displayed for the wearer while everyone else in the room tried to guess what the wearer was paying attention too. To call it rude would be an understatement. Google Glass had potential, but it was so poorly executed it’s destined to be a Harvard Business School Case. Imagine a worker directing a tower crane and seeing the skeleton of the building as they move steel around. Imagine touring Boston with history overlaid on the real world and Yelp stars on restaurant doors keeping you from making a mistake and entering the Union Oyster House. I could go on. There are hundreds of great ideas that could have overcome the terrible geek factor and the entire Emily Post chapter on Google Glass etiquette that contains the single word “Never.” None of those ideas made it to market.

There’s still hope for Google Glass but it’s unlikely developers will invest without a market and buyers won’t buy without compelling applications. Without sales, will there be enough to justify a next generation of Glass? Doubtful.

I can’t wait for the Google self-driving car. This will be hysterical.

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Some quick cloud facts http://nucleusresearch.com/some-quick-cloud-facts/ http://nucleusresearch.com/some-quick-cloud-facts/#comments Mon, 12 Jan 2015 15:00:56 +0000 http://nucleusresearch.com/?p=7368 The cloud. Hard to call it a new topic, it’s not. What it is, to oversimplify, is just a delivery...

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The cloud. Hard to call it a new topic, it’s not. What it is, to oversimplify, is just a delivery mechanism. But it is, to say the least, a very valuable delivery mechanism. We’ve been looking into cloud solutions and the actual returns achieved by the hundreds of ROI case studies we’ve published. So let’s put some numbers behind the value of the cloud:
– Cloud delivers 1.7 times greater ROI than on premise
– Cloud applications require 80% less support from IT
– Cloud applications need 85% less up-front costs
– On-premise solutions are on average 1.8 versions behind while cloud solutions are current
– On-premise solutions have 20x more “stranded” or unneeded user licenses than cloud solutions
– The tax advantages of OPEX versus CAPEX can reduce project costs by up to 5%

It was hard to find any benefits from an on-premise (or hybrid managed service) solution. The most noted reasons for choosing on premise were security concerns or corporate temperament but, in most cases, even those reasons seemed half-hearted. From support, to deployment, to ease of use, to making the CFO smile, there’s no question cloud-based solutions deliver greater value.

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Is gamification a good idea? http://nucleusresearch.com/is-gamification-a-good-idea-2/ http://nucleusresearch.com/is-gamification-a-good-idea-2/#comments Mon, 05 Jan 2015 14:41:52 +0000 http://nucleusresearch.com/?p=7370 Gamification is a hot topic in the CRM space but I’m wondering if it’s really a good idea or a...

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Gamification is a hot topic in the CRM space but I’m wondering if it’s really a good idea or a waste of money. The underlying premise seems sound. Make the interaction with the technology fun and recognize employees (particularly sales employees) for efforts such as entering information into the CRM system. The assumption is that the more information that’s in the CRM system, the more valuable that CRM system is to the organization. I agree with that, and we’ve published plenty of ROI studies measuring the return when sales and marketing teams are robust users of a CRM solution, but I’m still not so sure about gamification.

One thing we did notice when assessing the productivity of sales reps is that 8% is the optimal amount of time a rep should spend entering data in the system. More than that, or less, and they are not maximizing their efficiency.

Giving sales reps a virtual gold star when they reach arbitrary levels rewards them for data entry and that’s fine if they were data entry employees, but they’re sales reps. Data entry is their supporting activity, but sales is their primary activity. Rewarding anything else can create unnecessary distractions and excuses. Gamification is still new and we’ll see changes, but before you jump on the gamification bandwagon, ask yourself, are you promoting the behavior you really want?

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Net Neutrality and Guinness http://nucleusresearch.com/net-neutrality-and-guinness/ http://nucleusresearch.com/net-neutrality-and-guinness/#comments Wed, 17 Dec 2014 15:43:52 +0000 http://nucleusresearch.com/?p=7376 Net neutrality is an issue that’s generated a lot of interest, and more than its fair share of blog posts....

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Net neutrality is an issue that’s generated a lot of interest, and more than its fair share of blog posts. I’m loathe to add to the discussion but I was on the Acela train travelling back from NYC this past week and the topic came up among three of us at a table. The fourth person, by the way, was an artist somewhat disinterested in the topic. My two seatmates felt the content provider (Netflix, Amazon, etc.) should compensate the Internet provider (Verizon, Comcast, etc.) for the “extra bandwidth” they used. As you might imagine, I was amazed at their position.

The FCC (and by FCC I mean bureaucrats with slightly flexible ethical centers and future employment opportunity with the companies they oversee) is mucking around with the issue but I see it as an FTC rather than FCC problem. I’m paying for bandwidth (and let’s face it, on even the best days I’ve yet to see the download speed I’m promised) for that last mile and I expect to use it for anything I want. In the somewhat Alice-in-Wonderland logic of the FCC the Internet provider might have the right to charge for that same bandwidth both to me and to the content provider. Really?

Imagine walking into a bar and ordering a pint of Guinness. You order from a surly bartender who, despite the “we care about customer service” signs everywhere, outwardly hates you and demands you pay for your beer a month in advance. Now instead of a pint of the wonderful dark ale with bubbles flowing in the wrong direction he slides you a shot glass full of PBR. The explanation is that Guinness isn’t paying as much as PBR to “send” the beer to you and they are using shot glasses instead of pint glasses to better “manage” the workload on the dishwasher. Still, you need to pay full price. Imagine that happening in a bar in South Boston and what would happen to the bartender.

So let’s please end this net neutrality discussion and ensure that all Internet traffic is treated equally. It’s critical to the future of technology. There’s no “other” point of view on this topic.

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The Internet of Things http://nucleusresearch.com/the-internet-of-things/ http://nucleusresearch.com/the-internet-of-things/#comments Mon, 15 Dec 2014 16:39:46 +0000 http://nucleusresearch.com/?p=7366 There’s lots of talk about Internet connected devices. Some of the ideas are clever, some just interesting, and some of...

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There’s lots of talk about Internet connected devices. Some of the ideas are clever, some just interesting, and some of them remind me of Disney’s 1950’s–style Carousel of Progress ride. Let’s put aside the issues of security, privacy, and processing power and look at IoT from a bottom line point of view. Just because you can do it, doesn’t mean it has value. On the clever and useful side of the scale there’s health monitoring. Let me know when a device is about to break and I can avoid downtime while extending the operating life of the device. I’m increasing the “predictive” part of predictive monitoring and I can put a number on the value that delivers.

For just interesting ideas there’s energy use and the ability to communicate with the energy company to better manage draw. I’m not sure if the initial cost will be offset by the saving but over time it’s likely to deliver a benefit. In the case of the City of South Bend Indiana, we found they received a 123% ROI (m165 – IBM ROI case study – City of South Bend) when they used IBM Intelligent Operations Center with the city’s smart valves and sensors helped the city to gather and analyze sewer system data more efficiently.

On the “Carousel of Progress” end of the scale there’s the now cliché example of the refrigerator that orders food. That sounds great except it needs access to my travel schedule and I’m now tasked with keeping my refrigerator informed when I book a flight or decide to stay out late. Sure it may work, but it’s like the promise of the smiling 50’s housewife in an apron, pressing a button for food to magically appear. In reality she probably spent the 50s watching soap operas with a martini in her hand. The problem is that IoT is attracting self-proclaimed “futurists” like bugs to a bug light and generating lots of hype. If there’s one thing I know about futurists is that they rarely predict the future.

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The Future of Omnichannel Engagement http://nucleusresearch.com/the-future-of-omnichannel-engagement/ http://nucleusresearch.com/the-future-of-omnichannel-engagement/#comments Mon, 25 Aug 2014 17:26:08 +0000 http://nucleusresearch.com/?p=7032 There’s been a lot of hype about omnichannel customer engagement over the past few years. That’s because many people are...

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There’s been a lot of hype about omnichannel customer engagement over the past few years. That’s because many people are realizing that after fixing the internal issues with shiny new CRM systems, integration, and analytics, there’s still the pointy part of the sale when you actually touch the customer. Most of the omnichannel messaging has come from CRM vendors that seek to bring siloed processes and databases together so companies can more intelligently engage with their customers. However, in the business-to-consumer world, engagement is about a lot more than just CRM. Nucleus has been following the evolution of Episys’s digital signage and content solutions for some time and has seen the company’s success in driving better, more consistent customer engagement. Our VP of research, Rebecca Wettemann, will be part of Episys’s North American roadshow in September where she’ll be sharing the latest thoughts on the Four Stages of Omnichannel Maturity for retailers. To learn more, you can contact Episys directly at ClientRelations@Episys.com.

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Is OpenText giving away the ECM farm? http://nucleusresearch.com/is-opentext-giving-away-the-ecm-farm/ http://nucleusresearch.com/is-opentext-giving-away-the-ecm-farm/#comments Mon, 21 Jul 2014 19:14:04 +0000 http://nucleusresearch.com/?p=6866 It looks like OpenText is trying a new strategy to keep its customers happy: giving away its solutions for free....

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It looks like OpenText is trying a new strategy to keep its customers happy: giving away its solutions for free. This month the company announced for the second time in two months that it was giving new and existing customers the opportunity to download Tempo Box, its file sync and sharing solution. Now, this could be a generous gesture by OpenText to help its customers share files safely. Or, the more likely thought process is that the behemoth company is finally feeling the pressure of simpler, more nimble ECM and file sync and sharing services creeping into the enterprise space.

With Box, DropBox, and Microsoft all making inroads into the enterprise with easily deployed, cost-effective solutions, why wouldn’t OpenText be nervous that customers would start to defect to solutions that their employees already know how to use at the consumer level. Last year OpenText posted the first decline in license revenue in more than ten years. It’s no secret that the multitude of names for its solutions is confusing to even the most well versed ECM pundits, so as other vendors streamline and simplify their solutions to make deployment and adoption easier, the company is looking for a new carrot to entice its current customers to stick around. It looks like, for OpenText, that carrot is free pieces of its solutions to keep customers from taking their business across the street (read the report).

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Taking the Dark Cockpit to mobile devices http://nucleusresearch.com/taking-the-dark-cockpit-to-mobile-devices/ http://nucleusresearch.com/taking-the-dark-cockpit-to-mobile-devices/#comments Mon, 07 Jul 2014 15:49:08 +0000 http://nucleusresearch.com/?p=6825 Last year we started talking about the Dark Cockpit as an aspirational design model for enterprise software, and how software...

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Last year we started talking about the Dark Cockpit as an aspirational design model for enterprise software, and how software vendors should be investing in development that simplifies, focuses, and automates business tasks by using the intelligence of software (read the report). We’ve seen a number of vendors beginning to take the Dark Cockpit guidance to heart, with announcements of capabilities that deliver focused, actionable information to users in context. Salesforce.com’s announcement of Salesforce1 Mobile Reports and Dashboards is one. It’s a big step forward for Salesforce, who has typically relied on partners to deliver advanced analytics for its CRM. It also takes the Dark Cockpit to mobile devices, with customizable dashboards and reports that are optimized for mobile devices – driving even greater productivity than the 14.6% increase we measured in 2012 (read the report).

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Let’s look at IRR again… http://nucleusresearch.com/lets-look-at-irr-again/ http://nucleusresearch.com/lets-look-at-irr-again/#comments Wed, 18 Jun 2014 20:36:22 +0000 http://nucleusresearch.com/?p=6758 Internal Rate of Return (IRR) does not measure the return of a project. That’s a fact. Don’t let the word...

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Internal Rate of Return (IRR) does not measure the return of a project. That’s a fact. Don’t let the word “return” fool you. IRR is not the value of a project but rather the interest rate that sets the NPV equal to zero. There are issues with NPV notably that without a residual value at the end of the period the number will be artificially low. This is especially true for technology projects that are ongoing and have no fixed end point. IRR is useful, but only to the extent you are using NPV properly to assess a closed-end project and need to interest rate above which the project no longer makes sense. Examples might be when you are borrowing money and need to negotiate with the bank on the rate. IRR tells you your break-even point. Another example may be comparing projects that can be undertaken in different countries. Comparing the project IRR to the cost of capital in those countries tells you which countries make sense for the project. But the bottom line remains the same. IRR is not ROI. If it were ROI, it would be called ROI. It’s not. It’s called IRR. Completely different.

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